http://www.cnbc.com/id/48735251?__source=yahoo|headline|quote|text|&par=yahoo

S&P 500 Facing 25% Drop Before US Election: Janjuah

The S&P 500 is likely to fall by 20-25 percent over the next three months according to Nomura strategist Bob Janjuah.

In a research note published on Tuesday, the long-term bear who called the recent rally for U.S. stocks said he expects investors to be back in risk-off mode until the U.S. election is over.

“I now think the correct thing to do — as I also said in April and June — is to prepare for a serious risk-off phase between August and November…over the August to November period I am looking for the S&P 500 [.SPX 1424.85 6.72 (+0.47%) ] to trade off down from around 1400…by 20 to 25 percent...to trade at or below the lows of 2011.”

Janjuah expects the dollar to be a big beneficiary if the S&P 500 does fall as sharply as he predicts.

“This coming major risk-off phase will, in my view, also be very dollar bullish and bullish core government bonds,” said Janjuah, who thinks 10-year debt in the U.S., Germany and the U.K. could hit just one percent, and who is predicting more quantitative easing from the Federal Reserve in December.

Those hoping for a big bazooka from the Fed or the European Central Bank before December will be disappointed, he said.

We expect “Mr Bernanke to disappoint markets at Jackson Hole next week, and also because we are confident that markets will soon discover that neither the ECB nor Eurozone politicians will actually be able to deliver on their promises,” Janjuah said.

“For now we are happy to risk 30 S&P points against us, in order to potentially pick up 300 S&P points in our favor.”